Latvia

Transfer Pricing in Latvia

Latvian transfer pricing for tax year 2026 under the distribution-based Corporate Income Tax Law: who counts as a related person (Law on Taxes and Fees, article 1(18)), the arm's length price difference taxed as a deemed profit distribution (CIT Law, article 4(2)(2)(e), base divided by 0.8 and taxed at 20%), the methods and 5% mark-up for low value-adding services (Cabinet Regulation No. 677), and the documentation rules in article 15.2 as amended from 1 January 2026: a controlled transactions report filed above EUR 250,000, a local file above EUR 250,000, a master file above EUR 20,000,000, production deadlines, the penalty of up to 1% capped at EUR 100,000, the EUR 750m country-by-country report, and advance pricing agreements above EUR 1,430,000.